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Federal Court of Australia |
Last Updated: 13 April 2005
FEDERAL COURT OF AUSTRALIA
Australian Competition & Consumer Commission v Global Prepaid Communications Pty Ltd (ACN 095 154 108) (In Liq) [2005] FCA 409
CORPORATIONS – liquidation – proceedings against
company – leave to proceed granted where may assist case against personal
respondents
PRACTICE AND PROCEDURE – interrogatories –
questions as to state of mind of individuals allowed – privilege against
self-incrimination
discussed
Corporations Act 2001 (Cth),
s 500
Aspar Autobarn Co-operative Society v Dovala Pty
Ltd, (1987) 16 FCR 284, cited
Construction, Forestry, Mining, and
Energy Union of Australia v Alfred [2004] FCAFC 36; (2004) 135 FCR 459,
cited
Microsoft Corporation v CX Computers Pty Ltd [2002] FCA 3; (2002) 116 FCR
372, cited
Navair Pty Ltd v Transport Workers’ Union of
Australia (1981) 52 FLR 177, not followed
The Queen v Deputy
Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389, referred
to
Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat
& Livestock Corporation (1979) 42 FLR 204, discussed
Trade
Practices Commission v Manfal Pty Ltd (No 3) (in liq) (1991) 33
FCR 382, referred to
Wong v The Minister for Immigration&
Multicultural & Indigenous Affairs (2002) FCA 1271,
followed
AUSTRALIAN COMPETITION
AND CONSUMER COMMISSION v GLOBAL PREPAID COMMUNICATIONS PTY LTD (ACN 095 154
108) (In Liquidation), IN TOUCH
NETWORKS PTY LTD (ACN 098 279 746) (In
Liquidation), NICHOLAS YATES, FRANK YATES, NICHOLAS RHODIN, DANIEL ALBERT,
RUSSELL FIELDING
and JOHN RHODIN
N 328 OF 2003
GYLES
J
15 FEBRUARY 2005
SYDNEY
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AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION
APPLICANT |
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AND:
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GLOBAL PREPAID COMMUNICATIONS PTY LTD (ACN 095 154 108)
(In Liquidation)
FIRST RESPONDENT IN TOUCH NETWORKS PTY LTD (ACN 098 279 746) (In Liquidation) SECOND RESPONDENT NICHOLAS YATES THIRD RESPONDENT FRANK YATES FOURTH RESPONDENT NICHOLAS RHODIN FIFTH RESPONDENT DANIEL ALBERT SIXTH RESPONDENT RUSSELL FIELDING SEVENTH RESPONDENT JOHN RHODIN EIGHTH RESPONDENT |
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DATE OF ORDER:
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15 FEBRUARY 2005
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WHERE MADE:
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THE COURT ORDERS THAT:
1 Upon the Applicant undertaking by its counsel not to seek costs against the First and Second Respondents, the Applicant be granted leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) to proceed with these proceedings against the First and Second Respondents. 2 The Applicant be granted leave pursuant to O 16 r 1 of the Federal Court Rules to file and serve on the Third Respondent, within seven days, a notice in the form of Annexure 'B' to the Affidavit of Rebecca Monica Grace Lynch sworn 21 January 2005 (but amended to exclude paragraphs 27 to 38) requiring the Third Respondent to answer interrogatories. 3 The Applicant be granted leave pursuant to O 16 r 1 of the Federal Court Rules to file and serve on the Fourth Respondent, within seven days, a notice in the form of Annexure 'C' to the Affidavit of Rebecca Monica Grace Lynch sworn 21 January 2005 (but amended to exclude paragraphs 47 to 58) requiring the Fourth Respondent to answer interrogatories. 4 The Applicant be granted leave pursuant to O 16 r 1 of the Federal Court Rules to file and serve on the Sixth Respondent, within seven days, a notice in the form of Annexure 'E' to the Affidavit of Rebecca Monica Grace Lynch sworn 21 January 2005 requiring the Sixth Respondent to answer interrogatories. 5 Each of the Third, Fourth and Sixth Respondents answer the interrogatories served on him pursuant to orders 2 to 4 in accordance with O 16 r 2 of the Federal Court Rules within 21 days of service of the notice.
(Annexures omitted)
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
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AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION
APPLICANT |
|
|
AND:
|
GLOBAL PREPAID COMMUNICATIONS PTY LTD (ACN 095 154 108)
(In Liquidation)
FIRST RESPONDENT IN TOUCH NETWORKS PTY LTD (ACN 098 279 746) (In Liquidation) SECOND RESPONDENT NICHOLAS YATES THIRD RESPONDENT FRANK YATES FOURTH RESPONDENT NICHOLAS RHODIN FIFTH RESPONDENT DANIEL ALBERT SIXTH RESPONDENT RUSSELL FIELDING SEVENTH RESPONDENT JOHN RHODIN EIGHTH RESPONDENT |
REASONS FOR JUDGMENT
1 This is an application pursuant to s 500(2) of the Corporations Act 2001 (Cth) (the Act) for leave to proceed against the first and second respondents, each of which is in voluntary liquidation. I need not for the purposes of these reasons outline the nature of the proceeding beyond saying that it is brought by the Australian Competition and Consumer Commission (ACCC) against two companies and persons alleged to be associated with them. The proceedings are essentially for misleading conduct and the proceedings are effectively brought on behalf of consumers.
2 Generally speaking, a proceeding against an insolvent corporation should not be pursued if it would interfere with, or disturb, the orderly winding-up of the company. In the present case the liquidators do not appear but have on more than one occasion indicated consent to leave being granted provided no order for costs is made against them personally. Such evidence as there is about the financial position of the companies indicates that each is insolvent, even without considering the effect of any order which might be made in this case.
3 In one sense there is no purpose to be served by the application. I have permitted the solicitor for the third and fourth respondents to make submissions about the application although, strictly speaking, his locus to make such submissions may be questionable. He has relied upon the fact that, in essence, the proceedings are futile so far as substantive orders are concerned. There is no occasion to make any monetary order against a company in liquidation nor would any injunction lie in that situation. Effectively there would be a mere declaration of liability. It is submitted that it is clear that the only reason for pursuing this application is to obtain a forensic advantage against the third and fourth respondents, which is not an appropriate course in an application pursuant to the Act.
4 Each side has referred me to authorities governing this kind of discretion which, nonetheless, remains unfettered. I am disposed to grant the orders sought in the present case.
5 I should say I am not overly influenced by the approach of Lee J in Trade Practices Commission v Manfal Pty Ltd (No 3) (in liq) (1991) 33 FCR 382, to which I have been referred, in relation to what might be called the denunciation aspects of an order in this case. It seems to me that the proceeding against the individual respondents are the real remedies to be obtained and that the consumers and the public will be more interested in how those cases fare than the case against some insolvent corporations.
6 I should not shut out the argument that the continuance of the proceedings against the corporations may have some beneficial effect upon the proceedings against the others. The prejudice to the third and fourth respondents is not, I think, a relevant matter in considering the application. I do not think, however, that in granting this leave it ought to in any practical way disturb the proper course of that winding-up and I would therefore grant leave only on the basis that counsel for the applicant proffers an undertaking not to seek costs against the first and the second respondents. That will ensure that there is no prejudice to creditors of the companies.
7 I am also satisfied that I should make orders granting leave for the administration of interrogatories pursuant to O 16 r 1 of the Federal Court Rules.
8 The opposition to those orders is based firstly upon what might be called practical considerations: the cost; the impact upon the respondents; and the fact that it would affect the way they had to conduct their case. All of those considerations are, in my view, just the inevitable result of being involved in this kind of litigation.
9 There were, however, two matters of principle raised. The first was that a number of the questions probed the state of mind of the individuals concerned. It was submitted, based upon the decision of Evatt J in Navair Pty Limited v Transport Workers’ Union of Australia (1981) 52 FLR 177, particularly at 195 (citing older authority), that this form of interrogatory is inappropriate. Counsel for the applicant has, in addition to seeking to distinguish that decision, referred me to the decision of Wilcox J in Wong v The Minister for Immigration and Multicultural and Indigenous Affairs (2002) FCA 1271, particularly at [33]–[38], where his Honour took a contrary view and permitted what he described as interrogatories relevant to motive, where motive was a relevant factor. Reference was also made to the decision of Woodward J in Aspar Autobarn Co-operative Society and Others v Dovala Pty Limited (1987) 16 FCR 284, but I think the assistance from that decision is quite limited. In my opinion, Wilcox J is correct in principle and I will follow his decision. It is also my recollection that the same issue was debated and settled in the Supreme Court of New South Wales some time before that.
10 The second objection in principle is that a person cannot be forced by interrogatory to incriminate himself or herself. That is plainly correct. The leading authority in this field of the law is now acknowledged to be the decision of Deane J in Refrigerated Express Lines (Australasia) Pty Limited v Australian Meat and Livestock Corporation (1979) 42 FLR 204. Deane J distinguished proceedings that are directly for penalties on the one hand and, on the other hand, proceedings that are not actions for penalties but where the disclosure of facts arising from those proceedings might expose a person to the risk of penalty or criminal proceedings. In the first class of case, there will be no interrogatories ordered at all. In the second case, the general principle is that interrogatories will be ordered as relevant leaving it to the subject of the order to make and justify a claim of privilege in answer to particular interrogatories.
11 His Honour's enunciation of principle has been approved in a number of recent cases, for example, by the decision of the Full Court in Construction, Forestry, Mining, and Energy Union of Australia v Inspector Alfred [2004] FCAFC 36; (2004) 135 FCR 459. These cases in turn pick up an earlier line of authorities, including a decision of Lindgren J in Microsoft Corporation v CX Computers Pty Limited [2002] FCA 3; (2002) 116 FCR 372, where his Honour closely examined the relevant decisions. I note, however, that the decision of Deane J may turn to some extent upon the form of the rules at that time. I do not rule out the possibility that the nature of the interrogatories, the nature of the case and the intention of the parties to make a claim for privilege in relation to all questions might well affect the exercise of discretion as to whether to make the order, having in mind the fact that an order for interrogatories is now entirely discretionary. I also refer to the decision of Beaumont J in the The Queen v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389, which may not have been fully understood in some of the commentary upon it.
12 However, it is not so clear in the present circumstances that either all of the questions will be objected to or, if objected to, that the objection must necessarily be upheld. In these circumstances I ought not decline to order interrogatories which are proper and which are directed to proof of the relevant facts. The debate in principle may be held on a later occasion after objections have been taken.
13 I should indicate that I do not propose, however, to allow interrogatories 27–38 inclusive. Those questions are directed to the affairs of the first and second respondents and although the third and fourth respondent are said to have a connection with those parties, I do not think that the questions are appropriate. It may be that they could be asked in cross-examination but that is not the test.
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I certify that the preceding thirteen (13) numbered paragraphs are a true
copy of the Reasons for Judgment herein of the Honourable
Justice Gyles.
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Associate:
Dated: 12 April 2005
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Counsel for the Applicant:
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CE Adamson SC, AR Zahra
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Solicitor for the Applicant:
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Phillips Fox
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Solicitor for the Third and Fourth Respondents:
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K McConnell, McConnell Jaffray
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Date of Hearing:
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15 February 2005
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Date of Judgment:
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15 February 2005
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